The total number of food machines increased by seven tenths of a percentage point in 2005. A more important factor contributing to the revenue increase, however, was the average price increase for all types of food products, as indicated in chart 9c.
Operators usually find it easier to raise food prices than snack or beverage prices since there are fewer items where consumers can make price comparisons with other retail offerings. Operators can also change their food offerings more easily than snack or beverage products since they buy them in smaller quantities.
While there are certain core menu items that operators need to sustain food machine turns, operators preparing food from scratch can easily adjust their core items, which in turn enables them to raise food prices faster than other vend product segments.
This does not mean that consumers are not price sensitive about food products. Operators reported there were certain barriers that were hard to overcome, even with new products.
Food sales have become harder to measure in recent years due to the mixing of ice cream and food products in frozen food machines.
The survey was unable to determine the amount of duplication of ice cream sales reported in frozen food machines and ice cream machines.
For the first time in five years, frozen food did not gain volume at the expense of freshly-prepared food, as indicated in chart 9b. One reason is that while frozen food machines continued to increase in 2005, the increase in both 2004 and 2005 was much less than in 2002 and 2003.
The rising number of frozen food machines has contributed to the increase in frozen food as a share of all food sold in recent years. Another contributing factor is the improved variety and quality of frozen food products.
Still another contributing factor in the rise of frozen food in recent years was the increase in integrated food systems. These systems which heat and serve food from a frozen state continued to increase in 2005, although they remained small in number. These systems are the most expensive vending machines that operators use, and while they make good selling tools, the return on investment takes much longer than that of other machines.
Frozen food grew as a percent of all food sold from 2000 to 2004, but the trend ended in 2005. Freshly-prepared food made its first comeback in 2005, small as it was.
The recovery of the food segment was not a unanimously welcome development since food in itself is not generally a profitable product segment for vending operators. It was, nevertheless, indicative of the industry's recovery since food is usually required by larger accounts.
Manual foodservice growth continues
For the first year since 2000, manual foodservice did not grab a bigger share of the overall industry revenue in 2005. This is consistent with the reversal of the dominance of the extra large operations in 2005, which dominate the manual foodservice portion of the industry.
The majority of the manual foodservice business is done by the extra large operations. In recessionary periods, extra large operations typically monopolize more of the business.
While manual foodservice did not increase as a percent of sales in 2005, it did not decrease either, and it continued to account for the largest single business segment at 30 percent of all sales.
Rising 2.9 points in 2005, manual foodservice was also one of the strongest growth areas. The only segments to post more growth were OCS, milk and ice cream, which are much smaller segments.
The disproportionate growth of manual foodservice made sense given the superior performance of managed commercial foodservice, as reported by the National Restaurant Association. This refers to onsite foodservice and foodservice contractors. This segment posted an average 7.7 percentage point increase in both 2004 and 2005.
For the second straight year, managed foodservice increased at a faster rate than total foodservice, which grew 5.5 points and 5 points in 2004 and 2005, respectively.
Automatic Merchandiser tracks only manual food sales for companies that also provide vending, which does not include the majority of manual foodservice providers. Vending operators involved in manual feeding did not perform as well as dedicated manual foodservice companies on average.